Posted by Richard Woodman, Partner
Rishi Sunak sets out post-Brexit financial services regime
“Financial services will be essential to our economic recovery from coronavirus, creating jobs and growth right across our country.”
Chancellor Rishi Sunak announced yesterday as he outlined the Government’s plans for one of the UK’s most productive and innovative sectors.
With the objective of renewing the UK’s position as the world’s pre-eminent financial centre, the Financial Services Bill also aims to make this country more open to investment, technologically advanced and a world leader in green finance.
Richard Woodman, Partner and Head of Financial Services, Royds Withy King, “This sector is fundamental to the UK’s economic strength. The sector employs over a million people, adds £130bn of value to the economy and contributes nearly £76bn in tax receipts to the NHS. With two thirds of the people employed in financial services working outside of London, this is a truly nationwide sector supporting all our regions”.
The Chancellor’s statement identified the opportunity to set out a new vision for this sector as we leave the European Union – one that is open, innovative and world leading in the use of green finance.
The Government’s framework of equivalence decisions for the EU and EEA Member States published yesterday now gives clarity to firms based here and in Europe for managing cross-border financial services activity. Using equivalence when it is in the UK’s economic interests to do so offers a technical, outcomes-based approach that prioritises stability, openness, and transparency.
Furthermore with freedom to build new and deeper financial services relationships with countries outside the European Union, the UK is holding promising dialogues with Switzerland, India and Japan.
Taking control of our regulatory regime allows us to be clear with our trading partners about how overseas firms access the UK’s markets in a way that is predictable, safe and transparent. The Chancellor’s task force to make recommendations on our future listings regime will boost the number of new companies who want to list in the UK.
In addition to the taskforce the Government will shortly publish a consultation on reforming the UK’s regime for investment funds. The UK’s first Long-Term Asset Funding will encourage UK pension funds to direct more of their half a trillion pounds of capital towards the country’s economic recovery.
In his statement, the Chancellor announced how the sector will use technology to deliver better outcomes for consumers and businesses by building on our existing strengths as a leading global destination to start, grow and invest in fintech.
Richard adds, “By making sure our regulatory environment is ready to manage the far-reaching implications of technology on money, the Government will ensure that new forms of privately-issued currencies such as ‘stablecoins’ meet existing standards. There is further talk whether central banks can issue their own digital currencies, as a complement to cash. We await with interest more details on this new initiative”.
With Covid-19 bringing a renewed emphasis on responsible and ethical investing, there has never been more pressure to tackle climate change and protect the environment.
The Government’s announcement to mandate climate disclosures by large companies and financial institutions across our economy by 2025 means we will be the first G20 country to do so. Richard concludes, “With the drive towards Environmental, Social and Governance ‘ESG’ when measuring the sustainability and ethical impact of our investments, the new ‘green taxonomy’ will classify what we mean by ‘green’. This will help businesses and individuals better understand the impact of their investments on the economy. The Government’s Sovereign Green Bond to be issued next year will help fund projects to tackle climate change, finance much-needed infrastructure investment and create green jobs across this country”.
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